Sallie Mae 2006 Annual Report Download - page 173

13. Commitments, Contingencies and Guarantees (Continued)
academic year (and future loans made to these borrowers) will be sold to the Company, including certain loans
that are not originated or serviced on Sallie Mae platforms.
This agreement permits JPMorgan Chase to compete with the Company in the student loan marketplace
and releases the Company from its commitment to market the Bank One and Chase brands on campus. The
Company will continue to support its school customers through its comprehensive set of products and services,
including its loan origination and servicing platforms, its family of lending brands and strategic lending
partners.
Other Commitments
The Company offers a line of credit to certain financial institutions and other institutions in the higher
education community for the purpose of buying or originating student loans. In the event that a line of credit
is drawn upon, the loan is collateralized by underlying student loans. The contractual amount of these financial
instruments represents the maximum possible credit risk should the counterparty draw down the commitment,
and the counterparty subsequently fails to perform according to the terms of its contract with the Company.
Commitments outstanding are summarized below:
2006 2005
December 31,
Student loan purchase commitments
(1)(2)
....................... $61,593,226 $50,701,995
Lines of credit .......................................... 2,145,624 1,489,403
$63,738,850 $52,191,398
The following schedule summarizes expirations of commitments to the earlier of call date or maturity
date outstanding at December 31, 2006.
Student Loan
Purchases
(1)(2)
Lines of
Credit Total
2007 ...................................... $19,163,244 $ 559,291 $19,722,535
2008 ...................................... 20,991,645 302,824 21,294,469
2009 ...................................... 2,372,421 353,974 2,726,395
2010 ...................................... 7,071,403 729,543 7,800,946
2011 ...................................... 2,724,898 199,992 2,924,890
2012 ...................................... 9,269,615 — 9,269,615
Total ...................................... $61,593,226 $2,145,624 $63,738,850
(1)
Includes amounts committed at specified dates under forward contracts to purchase student loans and estimated future require-
ments to acquire student loans from lending partners based on expected future volumes at contractually committed rates.
(2)
These commitments are not accounted for as derivatives under SFAS No. 133 as they do not meet the definition of a derivative
due to the lack of a fixed and determinable purchase amount.
Contingencies
The Company is also subject to various claims, lawsuits and other actions that arise in the normal course
of business. Most of these matters are claims by borrowers disputing the manner in which their loans have
been processed or the accuracy of the Company’s reports to credit bureaus. In addition, the collections
subsidiaries in the Company’s debt management operation group are occasionally named in individual plaintiff
or class action lawsuits in which the plaintiffs allege that the Company has violated a federal or state law in
the process of collecting their account. Management believes that these claims, lawsuits and other actions will
not have a material adverse effect on its business, financial condition or results of operations. Finally, from
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SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)